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Working Paper Nr : ��

KMI Working Paper Series

________________________ The Economic Causes and Consequences of Canadian

Citizenship ________________________ Don J. DeVoretz and Sergiy Pivnenko

Working Paper Nr. 2 | Page 2 of 35

Introduction

The long-term goal of Canadian immigration policy is to insure that the majority of its

foreign-born arrivals become citizens. To this end the current Canadian ministry of

immigration is charged to perform both immigrant selection and citizenship functions.

Moreover, the majority of foreign-born permanent immigrants to Canada are entitled to apply

for citizenship after a three-year period of residency. According to the 1996 Census of

Canada, 74.6% of Canada’s foreign-born were citizens.

In addition the majority of Canada’s post-1986 immigrant flows emanate from China and

India, and, after 5 years in residence, these immigrants ascend to citizenship at an annual rate

of between 15 to 20% of the resident stock per year1. The process is nearly complete after the

25th year in residence as the stock of residents from China and India have largely acquired

citizenship. Just the opposite picture emerges for immigrants from the traditional source

countries of Western Europe and the United States. Here significant immigrant ascension to

citizenship only appears after 25 years or more in residence.

Rates of ascension vary even amongst immigrants from Western Europe. For example, more

than 68% of Polish immigrants to Canada had acquired citizenship, whereas only 24 per cent

of Dutch immigrants had become citizens. Finally, over 17% of all foreign-born residents

reported dual citizenship in 1996, with the largest source countries appearing in Western

Europe and the United States.

These stylized facts belie the degree of controversy that has arisen in Canada with respect to

the economic implications of citizenship acquisition. In 2003 the Canadian Supreme Court

upheld the citizenship requirement for an array of federal government jobs, and ruled against

an immigrant class action suit to recover damages from alleged discrimination.2 The plaintiffs

argued that both job and earnings discrimination arose under this requirement, since

immigrants without citizenship were unable to practice their profession and enjoy the

relatively high earnings from a federal position. Another issue has arisen as a byproduct of

∗ This is a substantially revised version of the Economics of Canadian Citizenship which appeared as Willy Brandt Series of

Working Papers in International Migration and Ethnic Relations 3. Malmö: Malmö University. www.mah.se. 1 The Census of Canada does not provide any information on the year of citizenship acquisition.

2 The Court argued in the majority that, since there was no barrier to becoming a Canadian citizen, then inherently immigrants

did not face discrimination, but just a waiting period which applied to all immigrants.

________________________ The Economic Causes and Consequences of Canadian

Citizenship∗


linking citizenship with the growth in return migration of erstwhile Canadian immigrants. It

has been observed that over 25% of the post-1986 Chinese immigrants to Canada had

returned to Hong-Kong or China by 2004, most with Canadian citizenship (DeVoretz and Ma

2002). Canadian policymakers have made ambivalent pronouncements over the economic

impact of this phenomenon. Some policymakers consider the returning erstwhile Canadian

immigrants a Canadian asset which will increase trade and investment. Other observers are

less sanguine and feel that these Chinese-Canadian emigrants are potential future liabilities,

especially if they return to retire, thus putting economic pressure on the social system.3 In

addition, Canada’s membership in NAFTA now affords all Canadian citizens, including

immigrants who recently ascended to citizenship, the right to work in the United States in

selected highly skilled jobs. This exacerbates the concerns over Canada’s brain drain

(DeVoretz and Iturralde 2001).4

In sum, both Canadian immigrants and Canadian policymakers face a new set of economic

issues which arise from the process and the outcomes of immigrant ascension to citizenship.

Beyond these issues, a series of fundamental questions however need to be addressed,

including:

• What are the individual determinants that affect immigrants’ decision to ascend to

citizenship at various stages in their lifetime?

• Do immigrants economically gain in either the public or private labour markets

from their ascension to citizenship?

• From an economic perspective, what is the optimal waiting period before Canada

should allow ascension to citizenship?

In order to answer these questions we propose to model:

• The affect of economic (income, occupation), social (marital status, household

size, children, etc.), political (dual citizenship) and demographic (age, years in

Canada) variables on the immigrants’ decision to ascend to citizenship;

• The economic impact of citizenship on the occupational distribution and earnings

of immigrants.

3 Of course, there are many non-economic objections to returning immigrants, including an alleged lack of patriotism or failure

to integrate into the Canadian economy. 4 Concerns over the brain drain are redoubled if emigrating Canadian citizens obtained their schooling in Canada.


Literature

The economic literature on citizenship primarily consists of two separate views. One view

attempts to rationalize an immigrant’s decision to acquire citizenship and the other view

investigates the economic consequences of such decision. The evidence on the determinants

of acquiring citizenship remains highly controversial largely due to the specifics of the

populations studied and the varying nature of the data used. While some authors (Kelley and

McAllister, 1982; Portes and Mozo, 1985) insist on the importance of economic variables,

such as education, occupation and income, others (Bernard, 1936; Barkan and Khokhlov,

1980, Portes and Curtis, 1987) put forward cultural assimilation and demographic

characteristics as major determinants of immigrant’s naturalization decision. With the aid of

1980 U.S. Census microdata Yang (1994) applied a cost-benefit framework to investigate the

effects of individual characteristics and socio-economic conditions of home and host

countries on immigrant’s citizenship decision. His findings indicate that cultural integration

plays a more important role than economic integration in the naturalization process. Age at

immigration, marital status and presence of children were among the demographic factors that

increase the odds of becoming a citizen. While the home country level of development proved

to be a significant predictor of immigrant’s naturalization decision, the availability of dual

citizenship did not obtain the expected effect.

The other stream of studies ignores the economic rationale for becoming a citizen and

addresses only the possible economic impacts of immigrant citizenship. For example,

Bratsberg et al. (2002) using a youth panel data set find that immigrant ascension to

citizenship alters the immigrants’ occupational distribution and raises their earnings in the

United States labour market. Moreover, they argue that these effects are greater for

immigrants from less developed countries. Other economic studies of labour market outcomes

of citizenship are more limited in scope since they mostly incorporate the citizenship affect as

an addendum to a larger study. Pivnenko and DeVoretz (2004) found a strong citizenship

affect on Ukrainian immigrant earnings in Canada. Mata (1999) reports no evidence on the

economic impact of Canadian citizenship on immigrant earnings after conducting a principal

components analysis with 1996 Canadian data. In reviewing the economic outcomes of

Chinese-Canadian citizens who returned to Hong-Kong, DeVoretz and Zhang (2004) found

that returnees earned higher incomes in Hong-Kong than any other resident group. In the

Swedish case, Bevelander (2000) reports that the log odds of obtaining employment improved

for those immigrants who obtained Swedish citizenship in 1990.5

In sum, we conclude from this brief literature survey that no comprehensive study of both

citizenship ascension and its economic impact exists.

5 The interesting exceptions were immigrants from Denmark, Finland, Greece and the USA, who experienced no citizenship

effect on their employment probabilities in Sweden.


Stylized Facts

Table 1 reports some socio-economic data for the 1996 Canadian foreign-born population by

citizenship status. We focus on those variables which most frequently appear in a human

capital model of earnings. The age of foreign-born non-citizens is much lower, with over 46%

of this group under the age of 36, while foreign-born citizens comprise only 33% or less of

this relatively young age group (Figure 1).

Source: Authors’ tabulations from 1996 Census of Canada

This finding may be spurious since age is correlated with years in Canada (tenure). Given that

an immigrant must wait approximately three years to qualify for citizenship, we would expect

that the citizen (non-citizen) population would be older (younger). In fact, the distribution by

tenure in Canada reported in Table 1 reflects this observation since 50% of non-citizens have

been in Canada less than 5 years.

Frequency Percent Frequency Percent Frequency Percent Frequency PercentAge

17<age<26 6307 9,49 4033 8,02 2274 14,04 786 9,6525<age<36 15833 23,82 10587 21,06 5246 32,39 1975 24,2635<age<46 18668 28,08 14124 28,09 4544 28,06 2336 28,6945<age<56 17505 26,33 14541 28,92 2964 18,30 2148 26,3855<age<66 8158 12,27 6991 13,91 1167 7,21 897 11,02

Tenure in Canada0-5 years 10864 16,34 2811 5,59 8053 49,73 0 0

6-10 years 9813 14,76 7753 15,42 2060 12,72 2060 25,3011-15 years 6213 9,35 5190 10,32 1023 6,32 1023 12,5616-20 years 8014 12,06 6805 13,54 1209 7,47 1209 14,8521-25 years 10015 15,07 8521 16,95 1494 9,23 1494 18,3526-30 years 8864 13,34 7645 15,21 1219 7,53 1219 14,9731-35 years 3977 5,98 3464 6,89 513 3,17 513 6,3036-40 years 4512 6,79 4096 8,15 416 2,57 416 5,1141-45 years 3103 4,67 2939 5,85 164 1,01 164 2,01

46+ years 1096 1,65 1052 2,09 44 0,27 44 0,54Highest degree

H/School or less 30087 45,26 22013 43,78 8074 49,85 4241 52,09Diploma 21552 32,42 16904 33,62 4648 28,70 2494 30,63Bachelor 8905 13,40 6852 13,63 2053 12,68 837 10,28

Above bachelor 4953 7,45 3777 7,51 1176 7,26 456 5,60Ph.D. 974 1,47 730 1,45 244 1,51 114 1,40

OccupationUnskilled 32909 49,51 23569 46,88 9340 57,67 4250 52,20

Skilled 13749 20,68 10747 21,38 3002 18,54 1776 21,81Professional 19813 29,81 15960 31,74 3853 23,79 2116 25,99

Weeks worked0-25 10297 15,49 6696 13,32 3601 22,24 1212 14,89

26-40 8498 12,78 5899 11,73 2599 16,05 1115 13,6941-52 47676 71,72 37681 74,95 9995 61,72 5815 71,42

Wage earningsTotal income $30.873 $33.003 $24.262 $29.977

$27.909 $29.931 $21.632 $27.063Mean Mean Mean Mean

All immigrants Citizens Non-citizens (All) Non-citizens (5yrs+)

Table 1: Stylized Facts of Canadian Citizen and non-Citizen Populations: employed immigrants 18-65 years old


Non-citizens also report less education with 50% or more having a high school or less

qualification; thus these non-citizens are also over-represented in the unskilled category, with

58%.

Figure 1: Age distr ibutions of immigrant groups by citizenship status

0

5

10

15

20

25

30

35

%

All Citizens Non-citizens (All) Non-citizens(5yrs+)

18-25

26-35

36-45

46-55

56-65

Source: Authors' tabulations from 1996 Census of Canada

The labour force participation of non-citizens is also skewed with only 61% participating full

time in the Canadian labour force as compared to 75% for immigrants who became citizens.

If the observed age, low educational qualifications, limited skills and weeks worked are

combined for non-citizens, then you would expect that the wage earnings and total income of

non-citizens would be considerably lower than that of citizens who have a greater human

capital endowment. This proves to be true since non-citizens earn approximately 8,000

dollars, or 25%, less than citizens.

In sum, this brief overview indicates that citizenship status is correlated with human capital

endowment and earnings performance for Canadian immigrants.

Theory: Costs and Benefits of Ascending to Canadian Citizenship

The economic problem that immigrants face is to choose a state: citizenship or non-

citizenship, which maximizes their income net of citizenship ascension cost given their

human capital stock. Figure 2 imbeds the citizenship decision inside a more general model of

moving and staying (DeVoretz et al. 2002). Each stage of this journey involves a decision to

move or stay, and this decision is, in turn, conditioned by possible ascension to citizenship.

For purposes of illustration, we will follow only one branch of this decision tree to simplify

the argument. To focus on the citizenship decision, we only follow the bold path. In stage 1,

the immigrant resides in country A and decides to move to country B. This movement was

presumably motivated by the prospect of higher earnings and the opportunity to acquire

subsidized human capital in stage 2 (period 1) and a public good (a passport) in stage 2

(period 2), if citizenship is obtained in country B in stage 2 (period 2).


Both the acquisition of subsidized human capital and the prospects of receiving a free public

good (a passport) now increase the probability that this immigrant will ascend to citizenship

in Stage 2, if the expected earnings stream in country B net of costs exceeds the option of

returning home. The latter result is an outcome of an assumption that country A (e.g. China)

does not recognize dual citizenship, and would prohibit return migration as a citizen of

country B.6 But will the newly ascended citizen of country B stay in country B in stage 3 and

beyond? Only if the net income gains from staying as a citizen in country B exceed the

income gains from a citizen of country B moving to the USA or the rest of the world (ROW).

In sum, there will be no immigrant ascension to citizenship in country B if the home country

(A) income rewards exceed the other 3 options when no dual citizenship is permitted by

country A. In fact, the optimization problem for the immigrant is to choose a mobility path

which maximizes the net income given the human capital endowment, and transaction costs

of movement and obtaining citizenship.

In the absence of mutual recognition of dual citizenship by both Canada and the sending

country, the major cost of ascending to Canadian citizenship is the loss of home country

citizenship. This implies,

• no access to the home country labour market;

6 One apparent strategy for Chinese immigrants is for one of the two spouses to ascend to Canadian citizenship, while the other spouse remains Chinese. This insures access to China for the spouse who is not a Canadian citizen.

Move (A/C) Stay (B)

Return (A) Onward (C)

USA (C1) ROW (C2)

Stage 1

Stage 2

Stage 3

Person in Source Country (A)

Stay Home (A) Go Abroad (entrepôt ) (B)

Stage 4

Stay (B) Move (A/C)

Home (A)

Return (A) Onward (C)

Home (A) ROW (C2)

Period II

Period I

Entrepôt (B)

Figure 2: Decision Tree: Stay-Leave


• the possible loss of the right to hold land, or higher taxes to pay on land;

• no entitlement to public services, such as subsidized education for children;

• curtailing of social insurance benefits.

Application fees and any foregone income arising from continued residence in Canada to

fulfill citizenship requirements add to the costs of ascending to citizenship.

On the other hand, the benefits from Canadian citizenship include:

• access to the federal government labour market;

• potential access to the US labour market (NAFTA TN visa);

• any wage premium paid by private Canadian employers to Canadian citizens;

• a Canadian passport and visa waivers which lead to greater mobility.

If this model holds, then rates of ascension to citizenship are a positive function of the

immigrant’s age, years in Canada, skilled occupational status, home ownership, marital status

and presence of children, since each of these factors affects the costs and benefits of

ascending to citizenship. In addition, the greater the income earned by the immigrant prior to

citizenship in the destination country, the greater the probability of ascending to citizenship.

We acknowledge that other factors outside this human capital framework affect the

immigrant’s decision. Figure 3 points to further conditioning factors in the citizenship

acquisition decision beyond the human capital arguments cited above.

Figure 3: Propor tion of naturalized citizens among immigrants from high income countr ies (USA, Germany, I taly, Netherlands) and low income countres (China and India)

00,10,20,30,40,50,60,70,80,9

1

0-5 6-10 11-15 16-20 21-25 26-30 31-35 36-40 41-45 46+

Years since immigration

Nat

ura

lized

cit

izen

s/A

ll im

mig

ran

ts

USA, GER,ITA, NHL

China andIndia

Source: Authors' tabulations from 1996 Census of Canada

Figure 3 illustrates the cumulative process of immigrant ascension to citizenship for two

vintages of immigrants. As noted earlier, immigrants from China and India largely complete


their citizenship acquisition between the 6th and 11th year (after five years in residence), when

80 % of the Chinese and Indian stock of immigrants have become Canadian citizens.

The older vintage of European and United States immigrants experience a mild spurt in

citizenship acquisition in the first five years of eligibility, from 10% to 40%, but do not

approach the Chinese or Indian rates of citizenship acquisition until after 45 years of

residence in Canada.

Why is there such a gap across countries of origin and vintages of immigrants? Several forces

appear to be acting on these vintages of immigrants to affect their probability of citizenship

acquisition, and any modeling exercise must recognize these forces. First, the foregone

income in the home country conditions the speed of ascension. In the absence of dual

citizenship recognition, the immigrant faces a low opportunity cost by foregoing the

opportunity of return migration after the move to Canada then citizenship acquisition is earlier

and faster.

Next, the ease and desire for family reunification will affect the immigrant’s decision to

acquire citizenship. If Chinese and Indian immigrants show a greater propensity to sponsor

family members than the older European vintage of immigrants (Akbar, 1995), return

migration by Chinese and Indian immigrants will be less likely.

In addition, differential benefits of acquiring Canadian citizenship accrue to the two groups

depicted in Figure 3. Acquisition of Canadian citizenship by Chinese and Indian nationals

affords a potential increase in labour mobility since these groups can enter the United States

labour market with a TN or NAFTA visa. Of course, United States and Western European

passports would yield entry to their holders into NAFTA or EU labor markets respectively,

without the necessity of acquiring Canadian citizenship and a Canadian passport.

In sum, human capital characteristics plus immigrant source country characteristics (level of

development, dual citizenship recognition and portability of home citizenship) should be

incorporated in an economic model of citizenship acquisition.


Results: Citizenship Acquisition

First we report our regression results for our model of citizenship ascension for all of

Canada’s major immigrant sending countries.7 Since we also feel that citizenship may vary by

gender, we further disaggregate our results by gender.8 For male immigrants (Table 2) most of

the life-cycle variables obtain the predicted sign and are significant. The effect of the income

variable (LNWDIF) that measures the predicted logarithmic differences of citizens versus

non-citizens wages is relatively small and negative.9 Home ownership (HOWN) and years

since immigration (YSM), strongly influence the log odds of ascending to citizenship.

Although being legally married generally decreases the likelihood of ascension to citizenship,

presence of young children partially offsets this effect.

Table 2: Model of probability of acquir ing Canadian Citizenship (1996): Male immigrants from all countr ies

Coeff. b/St.Er. P[|Z|>z] Mean of X Elasticity

Constant -0.28786 -3.848 0.0001

AGE 0.009143 4.611 0.0000 43.38212 0.073352

LMARRIED -0.21998 -4.577 0.0000 0.787355 -0.03077

LMAR_CHL 0.137247 3.518 0.0004 0.384171 0.009654

YSM10_15 1.547801 27.643 0.0000 0.116314 0.022689

YSM16_21 1.55922 31.981 0.0000 0.185319 0.039244

YSM22_27 1.555827 29.948 0.0000 0.171376 0.035681

YSM28_33 1.745231 24.711 0.0000 0.092566 0.018857

YSM34_38 1.974547 23.603 0.0000 0.078847 0.016839

YSM39PL 2.676078 23.385 0.0000 0.071056 0.017156

HOWNER 0.365816 10.389 0.0000 0.700902 0.049639

LNWDIF -0.08871 -3.498 0.0005 0.050131 -0.00082

Number of observations 26824 Log likelihood function -12237.8

Chi squared 3892.167 Restricted log likelihood -14183.88

Notes: Logistic regression: dependent variable CTZN

Source: Authors’ calculations from 1996 Census of Canada

7 These countries include China, France, Germany, India, Italy, Lebanon, Netherlands, Philippines, Poland, Portugal, United Kingdom, United States, Vietnam, and Yugoslavia, for a total of 23,715 observations. 8 Our target population includes male and female immigrants 25-65 years old, who reported wage income in 1995. Also see appendix A for further information.

9 For non-citizens this variable is calculated as iiCi LNWAGEXLNWDIF −= β̂ , for citizens iNCii XLNWAGELNWDIF β̂−= ;

where LNWAGEi – logarithm of individual’s annual wage earnings, Xi – vector of individual’s characteristics, NCβ̂ and Cβ̂

are vectors of OLS coefficients estimated from log-linear earnings equations for non-citizens and citizens respectively. This variable equals the mean income difference between a 35-year old immigrant with Canadian citizenship and without, from the particular country of origin, for the sampled observation. Figures 6 and 7 illustrate how this was computed.


Table 3 indicates that there is one difference in immigrant ascension by gender as the effect of

the predicted wage difference becomes strongly positive. The remaining variables for the

female equation obtain similar signs and significance as those reported for males in Table 2.

Table 3: Model of probability of acquir ing Canadian Citizenship (1996): Female immigrants from all countr ies


Constant -0.3512 -3.893 0.0001

AGE 0.007152 3.153 0.0016 42.23825 0.057184

LMARRIED -0.15737 -3.236 0.0012 0.720462 -0.021

LMAR_CHL 0.216705 4.614 0.0000 0.323964 0.012978

YSM10_15 1.523287 24.017 0.0000 0.124322 0.024864

YSM16_21 1.652548 29.777 0.0000 0.200687 0.046244

YSM22_27 1.541088 26.78 0.0000 0.181235 0.038874

YSM28_33 1.583654 20.211 0.0000 0.089946 0.017727

YSM34_38 2.11472 19.489 0.0000 0.060992 0.013454

YSM39PL 2.738332 18.842 0.0000 0.057858 0.01409

HOWNER 0.308999 7.609 0.0000 0.704045 0.042809

LNWDIF 0.680476 22.545 0.0000 0.145651 0.018762





We now turn to the effect of the level of development in the immigrant source country on

ascension to Canadian citizenship in Tables 4 and 5. The results for immigrants from non-

OECD countries and OECD countries are vastly different.10 In the OECD case, the wage

earnings difference between immigrants with and without citizenship status, home ownership

and years in Canada are significant and correctly signed. The household composition effects

(age, marital status, presence of children) are either insignificant, or obtain the incorrect sign

and do not condition either male or female OECD immigrant citizenship ascension as

predicted.11

10

The OECD countries include France, Germany, Italy, Netherlands, Spain, Greece, Portugal, United Kingdom, and United States. 11 Note that the dual variable was found incorrectly signed in the process of model testing and dropped from further analysis. We believe that by increasing our sample size (20%), the results will improve as they did for Bloemraad (2002). In the currently available 5 % censored sample, most of the immigrant source countries are grouped, which limits the identified non-OECD countries to China, India, Lebanon, Philippines, Poland, Vietnam, former USSR (European) and Yugoslavia.


Table 4: LOGIT Model of probability of acquir ing Canadian Citizenship (1996): Female and male immigrants from OECD countr ies


Constant -0.37047 -3.632 0.0003

AGE -0.00426 -1.795 0.0726 45.35844 -0.03645

LMARRIED -0.00695 -0.126 0.8999 0.77241 -0.00101

LMAR_CHL -0.05259 -1.042 0.2974 0.292479 -0.00292

YSM10_15 0.990141 12.189 0.0000 0.069625 0.009848

YSM16_21 1.423024 20.776 0.0000 0.170989 0.03416

YSM22_27 1.647506 24.468 0.0000 0.229282 0.054277

YSM28_33 2.086652 27.065 0.0000 0.170369 0.044023

YSM34_38 2.617567 28.933 0.0000 0.138516 0.038708

YSM39PL 3.2373 29.251 0.0000 0.131244 0.040221

HOWNER 0.184497 3.772 0.0002 0.792367 0.028519

LNWDIF 0.680207 20.654 0.0000 0.093558 0.01201





Table 5: LOGIT Model of probability of acquir ing Canadian Citizenship (1996): Female and Male Immigrants from NON-OECD countr ies


Constant -0.42993 -3.718 0.0002

AGE 0.01001 3.377 0.0007 41.40097 0.067753

LMARRIED -0.33643 -4.727 0.0000 0.79576 -0.04092

LMAR_CHL 0.316553 5.382 0.0000 0.429349 0.021903

YSM10_15 2.040359 25.372 0.0000 0.173307 0.037875

YSM16_21 2.455972 25.405 0.0000 0.179411 0.04451

YSM22_27 3.007945 19.825 0.0000 0.1154 0.028025

YSM28_33 3.426967 10.589 0.0000 0.036377 0.007571

YSM34_38 2.913817 8.912 0.0000 0.022272 0.004296

YSM39PL 3.928956 7.742 0.0000 0.024086 0.004971

HOWNER 0.544134 10.8 0.0000 0.659738 0.062255

LNWDIF -0.04853 -1.294 0.1956 0.096509 -0.00077






The non-OECD results reported in Table 5 are in sharp contrast to the OECD results. First,

the wage variable is insignificant and obtains an incorrect sign. In addition, household

composition and time-related variables (age and years in Canada) have strong positive effects

on the immigrant’s decision to ascend to citizenship.

Given the stylized facts reported in Figure 3, there also appears to be a distinct behavioral

break between those groups who ascend to citizenship when first eligible (between 4 to 6

years) and a second group who ascends to citizenship after 10 years of residence in Canada.

Tables 6 and 7 report the regression results for those immigrants who chose to ascend to

Canadian citizenship when it was first available to them, i.e. between the 4th and 6th year of

residence in Canada, and after 10 years in residence.

Table 6: LOGIT Model of probability of acquir ing Canadian Citizenship (1996): All immigrants with 4-6 years in residence


Constant 0.778829 5.169 0.0000

AGE 0.015654 3.905 0.0001 37.63465 0.137149

LMARRIED -0.28276 -3.106 0.0019 0.75988 -0.04804

LMAR_CHL 0.096897 1.31 0.1901 0.486577 0.010968

HOWNER -0.02994 -0.478 0.6326 0.529598 -0.00369

LNWDIF 0.293225 6.128 0.0000 0.028012 0.001912





For the immigrants with 4 to 6 years in residence, all the reported variables except home

ownership (HOWN) obtain significance and follow the model’s predicted signs. For the

immigrants who ascended to citizenship after 10 years of residence in Canada, the

significance levels of the variables change (table 7). The socio-demographic variables of age,

marital status and presence of children are either no longer significant, or obtain the incorrect

sign. However, the wage coefficient increases in magnitude and significance along with the

most of the years-in-Canada variables.

In sum, the proposed socio-economic model of immigrant ascension rationalizes the decision

process for both OECD and non-OECD immigrants in different dimensions with the wage

differences variable proving relevant in both cases. In addition, the model best describes the

process of immigrant ascension for those with less than six years in Canada.


Table 7: LOGIT Model of probability of acquir ing Canadian Citizenship (1996): All immigrants with 10 years or more in residence


Constant 1.656238 18.732 0.0000

AGE -0.00174 -0.869 0.3848 45.13002 -0.00934

LMARRIED -0.00172 -0.037 0.9705 0.762193 -0.00016

LMAR_CHL -0.0113 -0.265 0.7910 0.318576 -0.00043

YSM16_21 0.100895 2.058 0.0395 0.268285 0.003165

YSM22_27 0.053706 1.06 0.2890 0.245494 0.001553

YSM28_33 0.181662 2.93 0.0034 0.127842 0.002625

YSM34_38 0.572407 7.705 0.0000 0.099538 0.0057

YSM39PL 1.227357 12.76 0.0000 0.091435 0.009223

HOWNER 0.192599 4.737 0.0000 0.790466 0.018909

LNWDIF 0.430332 16.651 0.0000 0.10274 0.005261





Economic Impact: Occupational Shift

Given the literature reviewed and the arguments contained in our theory section, two major

citizenship effects should appear in the labour market. First, the occupational distribution of

citizens should change to increase the number of foreign-born TN-professional and

government occupations after citizenship.

Next, controlling for all other human capital arguments, citizenship acquisition should

increase the earnings for all immigrants, since they should face less labour market

discrimination owing to perceived cultural differences.12

Moreover, the earnings effect from citizenship should be greater for those immigrants with

professional qualifications, since their labour market has become larger given possible entry

into the United States and employment by the Canadian federal government. In fact, most

foreign-born Canadian citizens in 64 occupations can immediately apply for a TN or NAFTA

visa to work in the United States after obtaining a bone fide job offer.

Finally, the citizenship effect should differ by source country, with a greater effect being

generated for foreign-born citizens from non-English-speaking countries. The rationale for

this argument is that prior to citizenship acquisition, subsidized English language training is

12

See Bevelander (2000) and Scott (1999) who argue that cultural distance causes segmentation in the Swedish labour market.


made available to non-English-speaking immigrants to allow them to qualify as citizens.

Thus, citizenship acquisition signals to the Canadian employer that a minimum standard of

English (or French, if relevant) has been obtained.

Figures 4 and 5 illustrate the citizenship effect on the occupational distributions of males and

females respectively. The three classifications of occupational distributions for the foreign-

born reflect different stages in the tree diagram (Figure 2). Upon arrival in Canada immigrants

must declare what their intended occupation is before entering the labour market. This

intention is based on an immigrant officer’s assessment of the candidate’s educational

qualifications prior to admission to Canada. The intended occupation of the resident foreign-

born stock was strongly biased toward the professions (occupation 5), while the actual

experience after arrival is strongly weighted to the low-skilled (1) or clerical (2) occupations.

There is a perverse shift in the actual occupational structure for males toward clerical, and

away from skilled, when they become citizens (Actual_C).

Figure 4: Intended and actual occupations of male citizen (C) and non-citizen (NC) immigrants in Canada

0

5

10

15

20

25

30

35

40

0 1 2 3 4 5 6

Per

cen

tag

e

Intended

Actual_C

Actual_NC

1 - Low skilled2 - Clerical3 - Skilled4 - Semi-professional5 - Professional6 - Managerial

Skill level

Source: Authors' tabulations from IMDB and 1996 Census of Canada

For the female foreign-born residents in Canada (Figure 5), the distributional shifts across the

three states are as predicted. The intended occupations are strongly professional upon arrival,

and then the actual distribution collapses toward the low-skilled categories after arrival. When

female immigrants gain citizenship, there is a restoration in the occupational distribution as it

shifts back to mimic the intended occupation with a greater professional content.

In sum, we observe in Figures 4 and 5 a large shift between intended and actual occupations

after arrival, and some restoration of the occupational gap for females after citizenship is

obtained. This restoration does not occur for foreign-born males. This perverse result could


arise since many other factors are not controlled for in this diagram between the time period

of entry (intended occupation) and 1996 (actual occupation).13

Figure 5: Intended and actual occupations of female citizen (C) and non-citizen immigrants in Canada

0

5

10

15

20

25

30

35

40

0 1 2 3 4 5 6

Per

cen

tag

e

Intended

Actual_C

Actual_NC

1 - Low skilled2 - Clerical3 - Skilled4 - Semi-professional5 - Professional6 - Managerial

Skill level

Source: Authors' tabulations from IMDB and 1996 Census of Canada

Economic Impact: Earnings Shift

Even in the absence of a meaningful occupational shift (males), an earnings effect can

potentially be observed. Tables 8 and 9 report the results for two alternative human capital

models to explain foreign-born earnings by gender and citizenship.

Table 8 reports our preliminary earnings functions with a citizenship dummy variable (CTZN)

and a variable that interacts citizenship with occupational status. The standard human capital

variables, age, age squared and years in Canada, all obtain the expected signs under a human

capital earnings model. In this preliminary model, the citizenship variable (CTZ) is small for

both the male and female earnings models, it however obtains the incorrect sign in the female

group and is insignificant in the male case. For males and females the interaction variables for

occupation and citizenship status are all statistically significant and in most cases obtain a

positive sign. The exception is the coefficient on male administrative-citizenship variable,

which is small and negative.

13 In fact, the time period between the declaration of intended occupation and the observed occupation before and after citizenship can be long, and many intervening variables could negate our prediction. For example, selected out-migration or disappearance from the Canadian labour market could have occurred. This would leave us potentially with a less-skilled male foreign-born population, if only skilled Canadian immigrants leave over time, as suggested by DeVoretz and Ma (2002).


Table 8: Citizenship effect on immigrant earnings: all foreign-born14

Males Females

Variable Coefficient b/St.Er. P[|Z|>z] Coefficient b/St.Er. P[|Z|>z]

Constant 5.440613 75.025 0.0000 5.770422 72.099 0.0000

AGE 0.046198 14.491 0.0000 0.036376 10.139 0.0000

AGESQ -0.00047 -13.29 0.0000 -0.00038 -9.106 0.0000

YSM10_15 0.193395 14.26 0.0000 0.130508 8.936 0.0000

YSM16_21 0.24101 19.628 0.0000 0.209656 15.882 0.0000

YSM22_27 0.304905 23.28 0.0000 0.231712 16.335 0.0000

YSM28_33 0.351102 21.891 0.0000 0.254191 14.42 0.0000

YSM34_38 0.349524 20.037 0.0000 0.21877 10.597 0.0000

YSM39PL 0.356012 19.233 0.0000 0.242942 11.279 0.0000

LMARRIED 0.145254 14.754 0.0000 -0.00455 -0.482 0.6301

CITIZ 0.000819 0.077 0.9386 -0.06369 -5.205 0.0000

HLN 0.166116 19.091 0.0000 0.106157 11.07 0.0000

DIPL 0.143876 16.111 0.0000 0.116147 11.625 0.0000

BACH 0.248062 19.623 0.0000 0.260374 19.345 0.0000

BACHPL 0.352734 23.061 0.0000 0.369064 20.56 0.0000

PHD 0.530059 20.808 0.0000 0.63576 13.504 0.0000

MAN_CTZ 0.295307 20.441 0.0000 0.406621 19.992 0.0000

PROF_CTZ 0.18726 15.602 0.0000 0.420093 29.579 0.0000

SUPR_CTZ 0.166139 8.39 0.0000 0.258732 8.711 0.0000

ADM_CTZ -0.03783 -2.301 0.0214 0.225714 18.853 0.0000

LNWEEKS 0.843172 91.107 0.0000 0.784096 79.464 0.0000

Adjusted

R-squared 0.408103 0.40754

Model test

F[20,26803](prob) 925.70 (.0000) 692.31 (.0000)


We augment our initial model by further interacting citizenship with a language dummy thus

explicitly recognizing the importance of citizenship as a possible signal of language

competency.

Table 9 reports the results for our language-augmented citizenship-earnings model. The

citizenship variable (CTZN) has a relatively small effect on earnings, and is insignificant for

males. In addition, the coefficient on language ability interacted with citizenship indicates a

14

For a list of variables see Appendix A.


small but statistically significant effect on wage earnings for both groups, and obtains a

negative sign in the female case. However, the interaction of first language ability and

occupational status (managers, professionals and administrators) with citizenship results in a

strong positive interaction which boasts male and female foreign-born citizen earnings.

Again, the male administrative-citizenship variable is the exception.

Table 9: Citizenship effect on all foreign-born earnings (Full Model) 15

Males Females


Constant 5.463977 74.971 0.0000 5.741575 71.092 0.0000

AGE 0.046384 14.467 0.0000 0.037195 10.249 0.0000

AGESQ -0.00048 -13.429 0.0000 -0.0004 -9.46 0.0000

YSM10_15 0.216394 15.94 0.0000 0.148208 10.073 0.0000

YSM16_21 0.27662 22.741 0.0000 0.241713 18.338 0.0000

YSM22_27 0.345033 26.646 0.0000 0.271631 19.263 0.0000

YSM28_33 0.393432 24.699 0.0000 0.295576 16.785 0.0000

YSM34_38 0.394874 22.769 0.0000 0.26679 12.891 0.0000

YSM39PL 0.405865 22.005 0.0000 0.301128 13.931 0.0000

LMARRIED 0.136582 13.814 0.0000 -0.01549 -1.624 0.1043

CITIZ -0.00743 -0.673 0.5006 0.04136 3.405 0.0007

DIPL 0.170976 19.277 0.0000 0.164073 16.587 0.0000

BACH 0.286964 23.243 0.0000 0.330135 24.962 0.0000

BACHPL 0.404377 27.14 0.0000 0.452651 25.585 0.0000

PHD 0.596354 23.695 0.0000 0.735393 15.521 0.0000

HLN_CTZ 0.061308 5.406 0.0000 -0.09184 -6.489 0.0000

HL_CZ_MN 0.331891 19.97 0.0000 0.432879 17.972 0.0000

HL_CZ_PR 0.159652 11.379 0.0000 0.397041 23.306 0.0000

HL_CZ_SP 0.176435 7.247 0.0000 0.278735 7.62 0.0000

HL_CZ_AD -0.04234 -2.086 0.0370 0.229609 14.976 0.0000

LNWEEKS 0.852735 91.75 0.0000 0.796896 79.974 0.0000

Adjusted

R-squared 0.40121 0.39348

Model test

F[20,26803](prob) 899.60 (.0000) 653.01 (.0000)


15



Appendix B reports the earnings regression results for the two entry cohorts of pre-1980 and

post-1981 movers by gender. These two immigrant vintages were chosen to reflect the impact

of the 1978 Immigration Act, which dramatically changed the immigrant entry gates and

refined the points system. The main implication of these changes was to reconfigure the

immigrant source countries from Europe and the United States to Asia and Africa.16 In

addition, human capital characteristics became the major entry criteria for economically-

assessed immigrants after 1981.

One important difference appears across the cohorts with respect to the citizenship effect on

earnings. In the pre-1980 period the citizenship effect is significantly negative for males and

females, while it is significantly positive after 1981. The remaining parameters in these

earnings equations were stable between the two cohorts, suggesting that only the labour

market’s response to citizenship changed between these two periods.

Economic Impact: Age Earnings Simulations17

To illustrate the importance of the citizenship effect we produce below a series of country-

specific age-earnings simulations with and without the detected citizenship effect.

Figures 6 and 7 illustrate the citizenship effect on earnings for pairs (British and Chinese, and

United States and Indian) of old and new vintages of Canadian immigrants.

Figure 6: Age-earnings profiles for the Canadian born (CB), British immigrants Canadian citizens (BritIm_C) and non-citizens of Canada (Br itIm_NC), Chinese immigrants Canadian citzens (ChinIm_C) and non-citizens of Canada (ChinIm_NC)

$0

$5.000

$10.000

$15.000

$20.000

$25.000

$30.000

$35.000

25 35 45 55 65Age

Wag

e ea

rnin

gs,

199

5

CB

BritIm_C

BritIm_NC

ChinIm_C

ChinIm_NC

Source: Authors' calculations from 1996 Census of Canada

16 Under the 1951 Immigration Act, 75% of Canada’s immigrants entered from Western Europe and the United States in 1967. In 1981, under the 1978 Immigration Act 25 % entered from these countries. 17

Under all these simulations the mean values of the relevant variables, except age, are taken from the relevant estimating equation. These equations are available upon request.


The citizenship effects for both the Chinese and the British are positive. However, the

citizenship effect on Chinese earnings is larger. The Canadian-born age earnings functions are

now reported as a reference point (CB), and further highlight the citizenship effect on

earnings. For a Chinese immigrant who experiences a substantial earnings disadvantage upon

arrival, becoming a citizen augments his/her earnings such as to nearly equal that of the

Canadian-born. The citizenship effect on British immigrant earnings is sufficient to make

these immigrants “overachievers” . In other words, with citizenship British immigrants do not

suffer an initial earnings disadvantage, but rather experience a continuous earnings advantage.

Figure 7: Age-earnings profiles for the Canadian born (CB), US immigrants Canadian citizens (USIm_C) and non-citizens of Canada (USIm_NC), Indian immigrants Canadian citizens (IndIm_C) and non-citizens of Canada (IndIm_NC)

$0

$5.000

$10.000

$15.000

$20.000

$25.000

$30.000

$35.000

25 35 45 55 65Age

Wag

e ea

rnin

gs,

199

5

CB

USIm_C

USIm_NC

IndIm_C

IndIm_NC

Source: Authors' calculations from 1996 Census of Canada

Figure 7 portrays a similar effect when we pair the earnings performance for the United States

and Indian immigrants. Citizenship status grants United States immigrants a slight lifetime

earnings premium relative to the Canadian-born. There is once again a substantial boast in the

earnings of Indian immigrants from citizenship acquisition, such that Indians now overtake

the earnings of the Canadian-born at age 45.

Figures 8 through 10 in Appendix C report a similar pattern of citizenship effects on earnings

for older-vintage German and Italian immigrants and the newer Ukrainian arrivals. In all these

cases, citizenship status causes immigrants earnings to overtake the Canadian-born norm,

with the largest effect occurring for the more recent Ukrainian arrivals.

In sum, under these age-earnings simulations the citizenship effect on earnings for the

reviewed countries was substantial, and in every case except the Chinese, citizenship allowed

the respective immigrants to outperform the earnings of the Canadian-born.


Economic Impact: Decomposition of Wage Differentials between Naturalized and Native-born Canadians

As suggested earlier, ascension to Canadian citizenship not only provides immigrants with

access to an expanded labour market, but also rewards the newly naturalized citizen with a

wage premium, as shown in Figures 6 and 7. But are these equalized earnings a consequence

of non-discriminatory treatment due to citizenship or a result of the fact that newly ascended

citizens have a greater stock of human capital? Given that immigrants are either singly or

doubly selected, the average immigrant may have a greater human capital endowment than

the average native-born Canadian. Then, after acquiring Canadian citizenship, do these better-

educated and more experienced immigrants actually earn more than their native-born

counterparts? If so, why? In order to answer these questions we employ the Binder-Oaxaca

decomposition methodology. The basic idea underlying this method is that differences in

wages between two population groups (citizens and non-citizens) can be explained by the

differences in their productive characteristics, and by the differences in the OLS (Ordinary

Least Squares) regression coefficients, which in turn represent returns to those characteristics.

We now turn to estimating the sources of earnings differences between naturalized and

native-born Canadians. Using the pooled wage structure as a benchmark (“non-

discriminatory” structure) we obtain the decomposition of wage differential in the following

matrix form:18

PT

FBCBFBPTFBPCB

TCBFBCB XXXXWW βββββ ˆ)ˆ()()ˆˆ(lnln −+−+−=− ��

In this decomposition formula, the first term on the right hand side represents the amount by

which productive characteristics of the Canadian-born are overvalued (positive

discrimination), the second term measures the amount of the labour market undervaluation of

productive characteristics for naturalized Canadian citizens (negative discrimination), and the

third term attributes earnings differences to differences in different productive characteristics

(human capital endowments) of the two populations. We conduct this decomposition

experiment across genders and source country groups.

Table 10 reports the decomposition results which suggest that, regardless of the region of

origin, naturalized male citizens are better endowed with human capital than their native-born

counterparts, whereas females are approximately on a par with native-born females.19 For

example, in the absence of (positive) labour market discrimination, naturalized male

Canadians would have earned 12.87% greater wages than native-born males if they came

18

This modification of the original Binder-Oaxaca decomposition method was suggested by Cotton (1988). 19

Because we had to pool natives and immigrants, and because we had to subtract vectors of their regression coefficients, we had to omit the language variable. Its effect was partially captured in the intercept for the foreign-born. Nevertheless, the estimates will be biased.


from OECD countries, and 9.18% more if they came from Asian countries. However, this

advantage in human capital endowments is completely offset by the negative labour market

treatment for the Asian group (22.62%), and slightly reinforced by the overvaluation of

productive characteristics for the OECD immigrant citizen group (3.66%). As a result, males

from the OECD group earn on average 16.8% greater wages than the native born, contrary to

their counterparts from Asia who earn 14.15% smaller wages than the native-born average.

Table 10: Decomposition of wage differentials between naturalized and native-born Canadians: population of male employees 25-65 years old

Source countries

for naturalized

citizens

Native-born –

naturalized

citizens wage

differential

Positive

discrimination

for native-born

Negative

discrimination

for naturalized

citizens

Human capital

endowments

effect

All

countries -0.6% 1.57% 7.85% -10.03%

OECD -16.8% -0.26% -3.66% -12.87%

NOECD 14.15% 0.71% 22.62% -9.18%

Source: Authors’ calculations

Interesting conclusions arise from the decomposition results for females in Table 11.

Compared to their native-born counterparts, female workers from Asian countries

demonstrate an equal wage earnings performance with no labour market discrimination or

human capital disparity. Small positive discrimination (4.78%) is detected for females from

OECD countries. This positive discrimination and their slightly greater productive

characteristics translate into 8.6% wage premium over the average native-born female from

OECD countries.

Table 11: Decomposition of wage differentials between naturalized and native-born Canadians: population of female employees 25-65 years old

Source countries

for naturalized

citizens

Native-born –

naturalized

citizens wage

differential

Positive

discrimination

for native-born

Negative

discrimination

for naturalized

citizens

Human capital

endowments

effect

All

countries -4.16% -0.41% -2.13% -1.62%

OECD -8.6% -0.31% -4.78% -3.5%

NOECD 1.69% 0.0% 0.26% 1.42%


In sum, ascension to Canadian citizenship does not equalize the earning potentials of

immigrants and native-born. Our analysis indicates that labour market earnings performance


of naturalized foreign-born Canadians is conditioned by their country of birth.20 We found

that, depending on their birth place, male foreign-born citizens experience a greater over- or

under-valuation of their productive characteristics than the female foreign-born.

How does the Canadian labour market discriminate between foreign-born workers with and

without citizenship? Is the foreign-born citizenship earnings premium reported in Figures 6

and 7, owing to discrimination by citizenship status within the foreign-born group, or due to

varying degrees of human capital endowment? If the earnings premium derived from

citizenship is due to differential human capital endowments across the foreign-born, we will

have established evidence of positive self-selection into citizenship ascension. In other words,

better endowed foreign-born immigrants ascend to citizenship. If the earnings premium is

owing to overvaluation of foreign-born citizens’ productive characteristics, then positive

discrimination explains the citizenship wage premium.

To answer these questions, we turn to our decomposition analysis between foreign-born

citizens and non-citizens in Table 12.

Table 12: Decomposition of wage differentials between naturalized citizens and permanent residents of Canada: population of foreign-born employees 25-65 years old

Naturalized

citizens –

permanent

residents wage

differential

Positive

discrimination

for naturalized

citizens

Negative

discrimination

for permanent

residents

Human capital

endowments

effect

All occupations

Males 35.65% 1.24% 4.37% 30.04%

Females 34.87% 1.85% 6.19% 26.83%

Professionals

Males 28.51% 1.10% 4.96% 22.45%

Females 21.86% 0.72% 3.19% 17.94%


It is clear that for either males or females in general (all occupations), or for professionals in

particular, that the substantial wage differential which arises between foreign-born citizens

and non-citizens (column 2) is due predominately to differences in human capital

endowments. For example, all foreign-born males earned 35.6% more as citizens than non-

citizens, and differences in human capital endowments explained about 85% of this wage

premium. A similar pattern holds for the foreign-born professionals, suggesting positive self-

selection into citizenship acquisition for both professionals and all the foreign-born. It also

should be noted from Table 1, which reports the endowments for the various populations, that

20 This confirms the findings of Pendakur and Pendakur (1998).


the most profound difference in endowments reported is number of weeks worked. In short, a

greater percentage of naturalized citizens work full-time (75%) than non-citizens (62%).

Finally, the decomposition results by entry cohort (Appendix D) clearly indicate that wage

earnings differential between citizens and non-citizens is 3-3.5 times (5-6 times in

professional occupations) higher for immigrants who landed after 1980. This wage earnings

gap is mostly explained by the greater human capital endowments effect in the post 1980

cohort.

Conclusions

Ascension to citizenship for a select group of Canadian immigrants follows the socio-

economic model presented here. Immigrants from poor countries (non-OECD) and

immigrants who ascend to citizenship when it is first possible (4-6 years) have their decision

conditioned by their wage, marital status, age and presence of children. Immigrants from

developed OECD countries base their decision primarily on the prospect of an earnings gain

from citizenship and years in Canada. This decision-making process holds for both males and

females.

The economic impact of this citizenship decision is substantial in the Canadian context. There

exists a substantial gap between the immigrants’ intended occupation prior to arrival and the

actual occupations after entering Canada’s labour force. Female immigrants’ acquisition of

citizenship restored their occupational distribution, which then more closely resembled their

intended occupation prior to arrival. This restoration does not occur for foreign-born males.

In addition, after citizenship acquisition, both male and female immigrants experience a rise

in earnings. The interaction of citizenship, occupation and language boosts immigrant

earnings in managerial, professional and administrative occupations. This suggests that

citizenship acts as a signal for language competency, and that it reduces cultural distance.

Our simulation experiments traced the effect of citizenship on foreign-born earnings relative

to Canadians over their lifetimes. They indicated that, in the majority of cases, ascension to

citizenship reduced the earnings gaps relative to Canadians, and allowed the foreign-born

citizens to earn a premium.

Finally, decomposition analysis indicates that the citizenship earnings premium awarded to

the Canadian foreign-born is owing to their greater human capital endowment relative to their

Canadian-born reference group. In addition, citizens from OECD countries received a

premium for these human capital characteristics, while Asian immigrants experienced a

devaluation in their credentials. When we decompose the sources of earnings differences

between foreign-born citizens and non-citizens, the earnings advantage from citizenship is

explained almost entirely by the greater human capital endowment of foreign-born citizens,

especially the number of full-time workers. This suggests positive self-selection into


citizenship and the need to explore a model which recognizes that number of weeks worked,

or earnings and citizenship, may be endogenous.


Acknowledgements

We would like to acknowledge the financial support of RIIM, Vancouver’s Centre of

Excellence on Immigration, and the Willy Brandt Guest Professorship at IMER, Malmö

University. Comments at the IMER workshops at the Universities of Malmö and Bergen, and

IZA, Bonn have improved the original draft. Tommy Bengsston also provided insightful

comments.

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Appendix A: Working Sample Descr iption and L ist of Var iables

In this paper we use the data from the 5% censored sample from 1996 Census of Canada

(Public Use Microdata File). The population of interest was restricted to all foreign-born who

in 1996 were between 25 and 65 years of age, lived in Quebec, Ontario, Manitoba,

Saskatchewan, Alberta or British Columbia, and reported themselves full-time employed as

paid workers in 1995. In sum, our working sample of 46,925 immigrants included 36,372

naturalized Canadian citizens and 10,553 non-citizens (permanent residents).

Table 8

Dependent variable: natural logarithm of annual wage earnings LNWAGE

AGEP – age

AGESQ – age squared

LNWKS – natural logarithm of weeks worked

Dummy Variables:

YSM – years since immigration

CTZN – Canadian citizenship indicator (1 for naturalized citizens, 0 – non-

citizens)

HLN – indicator for official language (English and/or French) spoken at home

DIPL – indicator for college diploma or trades certificate

BACH – indicator for bachelor degree

BACHPL – indicator for unfinished schooling above bachelor level, master’s

degree or medical degree

PHD – indicator for doctoral degree

MAN_CTZ – indicator for citizens in managerial occupations

PROF_CTZ – indicator for citizens in professional occupations

ADM_CTZ – indicator for citizens in administrative and clerical occupations

Table 9

LNWAGE – natural logarithm of wage earnings

AGESQ – age squared

LNWEEKS – natural logarithm of weeks worked

Dummy variables:

YSM – years since immigration

CTZN – Canadian citizenship indicator

DIPL – indicator for a college diploma or trades certificate

BACH – indicator for bachelor degree


BACHPL – indicator for unfinished schooling above bachelor level, master’s

degree or medical degree

PHD – indicator for doctoral degree

HLN_CZN – non-English speaking country of origin interacted with citizenship

HL_CZ_MN – triple interaction of official language spoken at home, Canadian

citizenship and managerial occupation

HL_CZ_PR – triple interaction of official language spoken at home, Canadian

citizenship and professional occupation

HL_CZ_AD– triple interaction of official language spoken at home, Canadian

citizenship and administrative occupation


Appendix B: Pre 1981 and Post 1980 Cohor t Analysis21

Table 13: Males and females: pre 1980 cohor t

Males Females


Constant 5.20719 55.644 0.0000 5.990252 55.213 0.0000

AGE 0.071604 18.617 0.0000 0.037894 8.477 0.0000

AGESQ -0.00069 -16.27 0.0000 -0.00037 -7.367 0.0000

HLN 0.165568 15.619 0.0000 0.095996 7.943 0.0000

DIPL 0.134785 12.75 0.0000 0.105238 8.68 0.0000

BACH 0.266773 16.766 0.0000 0.291546 16.964 0.0000

BACHPL 0.382207 19.656 0.0000 0.410319 18.145 0.0000

PHD 0.543217 17.463 0.0000 0.68012 11.17 0.0000

CITIZ -0.04723 -3.18 0.0015 -0.14836 -8.641 0.0000

MAN_CTZ 0.308717 19.669 0.0000 0.434371 19.208 0.0000

PROF_CTZ 0.157334 11.371 0.0000 0.422488 25.335 0.0000

SUPR_CTZ 0.183518 8.511 0.0000 0.276834 8.374 0.0000

ADM_CTZ -0.05083 -2.676 0.0075 0.225686 16.105 0.0000

LNWEEKS 0.841626 69.488 0.0000 0.782009 56.168 0.0000

Adjusted

R-squared 0.35026 0.34397

Model test

F[20,26803](prob) 700.38 (.0000) 503.49 (.0000)


21



Table 14: Males and females: post 1980 cohor t

Males Females


Constant 5.143522 39.722 0.0000 5.563532 41.056 0.0000

AGE 0.066925 11.007 0.0000 0.048454 7.431 0.0000

AGESQ -0.00076 -10.427 0.0000 -0.00056 -6.997 0.0000

HLN 0.205126 14.514 0.0000 0.143756 9.706 0.0000

DIPL 0.150725 9.195 0.0000 0.12234 7.119 0.0000

BACH 0.212626 10.114 0.0000 0.208628 9.671 0.0000

BACHPL 0.289934 11.57 0.0000 0.296843 10.102 0.0000

PHD 0.456015 10.35 0.0000 0.55444 7.453 0.0000

CITIZ 0.060448 3.792 0.0001 0.022753 1.278 0.2012

MAN_CTZ 0.28705 8.568 0.0000 0.355633 8.056 0.0000

PROF_CTZ 0.275911 11.665 0.0000 0.431866 15.981 0.0000

SUPR_CTZ 0.1847 4.165 0.0000 0.2492 3.96 0.0001

ADM_CTZ -0.00119 -0.038 0.9699 0.25837 11.535 0.0000

LNWEEKS 0.856983 58.504 0.0000 0.781598 54.809 0.0000

Adjusted

R-squared 0.3565 0.39112

Model test

F[20,26803](prob) 425.29 (.0000) 378.51 (.0000)



Appendix C: Age-earnings Simulations by Country of Or igin and Citizenship Status

Figure 8: Age-earnings profiles for the Canadian born (CB), Germans Canadian born (GerCB), German immigrants Canadian citizens (Ger Im_C) and German immigrants non-citizens of Canada (Ger Im_NC) (wage earnings, 1995)

$0

$5.000

$10.000

$15.000

$20.000

$25.000

$30.000

$35.000

25 30 35 40 45 50 55 60 65Age

CB

GerCB

GerIm_C

GerIm_NC

Source: Authors’ calculations from 1996 Census of Canada Figure 9: Age-earnings profiles for the Canadian born (CB), I talians Canadian born (I taCB), I talian immigrants Canadian citizens (I taIm_C) and I talian immigrants non-citizens of Canada (I taIm_NC) (wage earnings, 1995)

$0

$5.000

$10.000

$15.000

$20.000

$25.000

$30.000

$35.000

25 30 35 40 45 50 55 60 65Age

CB

ItaCB

ItaIm_C

ItaIm_NC



Figure 10: Age-earnings profiles for the Canadian born (CB), Ukrainians Canadian born (UkrCB), Ukrainian immigrants Canadian citizens (UkrIm_C) and Ukrainian immigrants non-citizens of Canada (Ukr Im_NC) (wage earnings, 1995)

$0

$5.000

$10.000

$15.000

$20.000

$25.000

$30.000

$35.000

25 30 35 40 45 50 55 60 65Age

CB

UkrCB

UkrIm_C

UkrIm_NC



Appendix D: OAXACA-BINDER Decomposition Results by Cohor ts

Table 15: Decomposition of wage differentials between naturalized and native-born Canadians: population of male employees 25-65 years old

Source

countries for

naturalized

citizens

Cohorts

Native-born

– naturalized

citizens wage

differential

Positive

discrimination

for native-born

Negative

discrimination

for naturalized

citizens

Human

capital

endowments

effect

OECD All

Pre1981

Post

1980

-16.8%

-17.5%

-10.62%

-0.26%

-2.04%

0.37%

-3.66%

-0.1%

-0.49%

-12.87%

-15.38%

-10.5%

NOECD All

Pre1981

Post

1980

14.15%

-0.01%

31.82%

0.71%

15.9%

33.8%

22.62%

-0.18%

-0.14%

-9.18%

-15.78

-1.83%


Table 16: Decomposition of wage differentials between naturalized and native-born Canadians: population of female employees 25-65 years old

Source

countries for

naturalized

citizens

Cohorts

Native-born

– naturalized

citizens wage

differential

Positive

discrimination

for native-born

Negative

discrimination

for naturalized

citizens

Human

capital

endowments

effect

OECD All

Pre1981

Post 1980

-8.6%

-9.96%

1.98%

-0.31%

-7.0%

5.36%

-4.78%

-0.3%

0.65%

-3.5%

-2.66%

-4.02%

NOECD All

Pre1981

Post 1980

1.69%

-15.08%

18.84%

0.0%

-8.54%

15.41%

0.26%

0.0%

0.09%

1.42%

-6.53%

3.34%



Table 17: Decomposition of wage differentials between naturalized citizens and permanent residents of Canada: population of foreign born employees 25-65 years old

Cohort

Naturalized

citizens –

permanent

residents wage

differential

Positive

discrimination

for naturalized

citizens

Negative

discrimination

for permanent

residents

Human

capital

endowments

effect

All occupations

Males

All

Pre1981

Post

1980

35.65%

9.00%

28.90%

1.24%

0.24%

5.47%

4.37%

1.79%

8.31%

30.04%

6.97%

15.12%

Females

All

Pre1981

Post

1980

34.87%

9.40%

32.27%

1.85%

0.61%

5.86%

6.19%

4.16%

9.02%

26.83%

4.62%

17.39%

Professionals

Males

All

Pre1981

Post

1980

28.51%

4.86%

25.61%

1.10%

0.16%

4.90%

4.96%

1.65%

8.90%

22.45%

3.05%

11.81%

Females

All

Pre1981

Post

1980

21.86%

3.01%

22.01%

0.72%

0.22%

3.45%

3.19%

1.67%

6.62%

17.94%

1.12%

11.95%


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